What must I keep? What can I toss?
Questions about how long to keep tax returns and other documents face many taxpayers at this time of year.
As a general rule, the Internal Revenue Service (IRS) recommends holding on to copies of tax returns and supporting documents at least three years. However, there are some that should be kept up to seven years in case a taxpayer needs to file an amended return or if questions arise. That includes records relating to real estate after you've disposed of the property.
Even though you don't need to send them to IRS as proof of coverage, it's a good idea to keep health care information statements should with other tax records.
These include records of any employer-provided coverage, premiums paid, advance payments of the premium tax credit received, and type of coverage. Three years after you file your tax return is the recommended time for keeping these records.
How to store
Whether your tax records are paper or electronic, the IRS says you should be sure they're kept safe and secure -- especially any documents bearing Social Security numbers. It's also a good idea to scan paper tax and financial records into a format that can be encrypted and stored securely on a flash drive, CD or DVD with photos or videos of valuables.
Records to be saved include those that support the income, deductions and credits claimed on returns. You'll need them if the IRS asks questions about a tax return or to file an amended return.
When records are no longer needed for tax purposes, make sure they are destroyed properly to prevent the information from falling into the hands of identity thieves.
If disposing of an old computer, tablet, mobile phone, or back-up hard drive, keep in mind it includes files and personal data. Removing this information may require special disk utility software.